The people’s advocate

Bharti AXA General Insurance was undergoing a major change last year and there was a possibility of reshuffle in shareholders. Instead of being made aware by the company, the staff came to know about it through press reports. This could have raised quite a few challenges if not handled well. The first thing we did was to communicate openly about this to the staff, giving them all the details required. In addition, we set up regular communication and meetings with the staff on a pan-India basis to address any query from them and ensured normal execution of all operations. This had a positive impact on the staff and at the end of the year we had not just managed to meet all business targets but also saw an increase in employee satisfaction that we measure every year.

During economic slowdown or market turns, it is important that HR is involved during all boardroom discussions so that they are abreast of the situation and people become the integral part during the decision-making process. As a chief people’s officer, it is his or her responsibility to ensure and lead all employee communication for the organisation, be available 24/7 for answering queries and concerns, and to motivate during times of change.Communication is one important strategy during turnarounds and it should be transparent, factual and employee centric. This will ensure that there is no ambiguity and uncertainty in the minds of the employees. Also, the HR head needs to make sure the communication is factual and pragmatic – neither alarmist nor too optimistic for the organisation to maintain credibility in the eyes of its employees. Read more..

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Let There be Synergies

India’s it Story so far was that of a few big players and a number of smaller ones. Now it’s time that some M&As Balance this Anomaly out

It has long been said that the Indian IT/ITeS and BPO sector is quite prone to M&A activity. For the IT/ITeS sector, the reason is that it has traditionally been akin to a comet with a small head and a long tail. Apart from the top few companies that steadily moved up the value chain and also build differentiated vertical expertise particularly in BFSI, a large part of the sector has traditionally thrived on pricing. That advantage has steadily eroded with other software destinations like Vietnam, China, et al coming into the picture; and this nightmare is particularly real for the BPO sector. In fact, they are also competing with home countries. This year, UK-based firms Aviva, BT, Santander and New Call Telecom decided to move their centres back to the home country citing rising joblessness there, the need for an onsite model and also the rising costs in India. Moreover, with the issue on visas wherein US lawmakers have passed norms restricting H1B visas to Indian companies and also hiked visa fees by around $2000, the cost of doing business with the main market – the US is steadily going up. In the subsequent negotiations over handling this row, US is looking for more Indian companies to hire overseas, and this is another trend that could significantly alter the cost model. There are further problems for them back home, as the STPI tax benefit was not renewed this year. For smaller IT players, margins are typically at around 15% and they may find it hard to survive.

Finally, the uncertainty in the global environment persists, and is particularly riskier for IT companies that are heavily dependent on exports. Some impact has already been seen on larger firms as the Q1 results indicate. Infosys Technologies saw net revenues of Rs.74.85 billion in the first quarter, a growth of 3.2% qoq while EBITDA declined by 6.4% qoq to touch Rs.21.76 billion. The guidance for the second quarter USD revenue growth has analysts somewhat concerned as it is just 3.5-5%; considering that the quarter is normally the strongest for the company. Wipro reported a drop in Q1 net profit by 2.9% qoq to record Rs.13.35 billion and revenues jumped by 3% qoq to Rs.85.64 billion. While Infosys has talked about the risk of reduced client spending, TCS (even though its results were better) and Wipro have admitted that they are facing an uncertain environment apart from currency fluctuations. Smaller players could be under serious distress in the coming months as a global slowdown begins to take shape.

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Source : IIPM Editorial, 2012.

An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

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